Stock Market Today: MBA Mortgage Applications Index Drop

The MBA mortgage applications index fell -3.1% in the week of June 4, after drops of -4.0% last week and -4.2% in the week before that, but gains of 1.2% and 2.1% in the two prior weeks, leaving declines in each of the last three weeks, and in all but seven weeks of 2021.

This last headline drop entirely reflected a -5.1% decline in the refi index to a 16-month low, after a -4.6% decline to a 15-month low, and a -7.2% drop in the week before that. We saw a 0.3% uptick in the purchase index, after a -3.1% drop to a 12-month low.

The y/y growth rates are all oscillating due mostly to base effects from last year’s pandemic gyrations. The applications index posted a -25.7% y/y plunge, versus 3.0% y/y in the prior week. The refi index posted a -26.8% y/y plunge, compared to 6.0% y/y, while the purchase index sat a -24.0% y/y, compared to -1.6% y/y.

The 30-year mortgage rate slipped to 3.15% from 3.17% in the prior week, versus readings in the last two weeks of 3.18% and the same 3.15%. We saw a 3.36% 2021 peak from mid-March and early April as the Treasury yield topped out at 1.74% on March 31. We saw an all-time low of 2.85% on December 11. The 5-year ARM was steady at last week’s 2.54%, versus readings in the prior two weeks of 2.81% and 2.58%.

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As of the first week of June, we’re seeing a monthly drop of -2.3% for the purchase index, after declines of -5.1% in May and -4.5% in April, a 3.6% March gain, and a -15.4% February plunge. The purchase index marked a 12-month low at the end of May, versus a 9-month low in mid-February and a 12-year high in mid-January.


The 2021 rise in mortgage rates has substantially depressed refi activity, while higher rates and soaring home prices are also impacting the purchase index. The declines seemed to reach a peak in February with a quick mortgage rate rise, bad weather, and the Texas freeze, but the downtrend has resumed with continued headwinds from remarkably high prices for building materials, and shortages of labor and land. We’re seeing restraint in all the housing sector data since April, despite outsized price gains and a historic shortage of home inventory.

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